divested in an employee buyout.
BASF sells Micro Flo to Arysta
The most recent example of BASF’s divestiture programme is the sale of the Micro Flo Company (), which became a wholly owned subsidiary of the BASF Corporation in 1998, to Arysta LifeScience. Micro Flo is a leading manufacturer and distributor of off-patent crop protection chemicals and provides a variety of manufacturing and distribution services. These include wholesale distributorships for fungicides, herbicides, insecticides, and plant growth regulators. The company has its headquarters in Memphis, Tennesee, and a formulation site in Sparks, Georgia. Under the agreement, Arysta LifeScience North America will acquire the commercial business of Micro Flo, including a portfolio of active ingredients and registrations, the Micro Flo trademark, patents and a development laboratory in Sparks. BASF will continue to own and operate the formulation production facility in Sparks. Long-term agreements will ensure continuity for the supply of the Micro Flo products sourced from BASF. With the exception of the employees at the Sparks manufacturing site who will remain with BASF, all Micro Flo personnel will be offered equivalent positions with Arysta, including the development laboratory staff at the Sparks facility.
“The sale of Micro Flo willl benefit our customers in the North American agricultural industry by enabling us to better focus our resources on bringing innovation to that market,“ commented Mr Heinz. Dr Christopher Richards, Arysta LifeScience president and CEO, said that the acquisition was another key element in his company’s long-term growth strategy. “Micro Flo is highly regarded for its portfolio of products and its customer service focus. Adding Micro Flo’s operations to our existing presence in North America will give Arysta LifeScience a substantially stronger platform for future growth in the region.”
Cheminova plans ahead to 2010
While BASF was stressing the importance of innovation and focus Cheminova was speaking of acquisition and the growth in off patent products. It said that companies without the necessary competences to survive would be the obvious acquisition targets for Cheminova in the future.. Additionally there will be increasing opportunities for the business to introduce new and interesting products as the global market share of patented products continues to fall. Development of know-how and the ability to innovate, however, will be important to ensure that by the end of the decade, Cheminova has further expanded its position as one of the leading companies within the industry.
In 2005 Cheminova introduced its business plan covering the period up until 2010. During this time, the company says it will aggressively pursue growth opportunities identified through the development of new products and acquisitions. The target is to increase revenue, through organic growth alone, from just over DKK 4 billion ($658 million) in 2005 to DKK 6 billion in 2010. Cheminova is targeting an EBIT margin of 14% towards the end of the five year period. However, it says that the plan will require considerable investments in development, registration and marketing and will in the early years lead to a decline in EBIT slightly under 10%. How is the plan progressing? In 2005, Cheminova’s sales revenue declined by 2% to DKK 4,017 million from DKK 4,094 million and EBIT dropped from 16% in 2004 to 11% in 2005. The company does claim, however, that the revenue was higher than expected at the beginning of the year. It says 2005 was a much more difficult year than 2004 which was characterised by more favourable climatic conditions and higher prices for a number of crops. Sales of Cheminova’s organophosphorous (OP) insecticides accounted for 26% of the company’s total revenue in 2005 against 30% in 2004. After an extraordinarily good year in 2004, characterised by high levels of insect infestation in most of the world the company’s expectations for 2005 were, in any case, more modest. Sales of malathion for use in the American boll weevil eradication programme were down relative to 2004, but higher than expected. The programme, which Cheminova says has been a tremendous success, is expected to end in a few years time.
Cheminova’s newer products increased their share of revenue from 41% in 2004 to 47% in 2005 and this share is set to grow dramatically in the coming years. Glyphosate, which is the largest product of this group, saw another increase in revenue, especially in Europe. Competition within the glyphosate market did, however, intensify further in 2005, resulting in declining prices. Sales of the fungicide flutriafol, which Cheminova bought from Syngenta in 2001, increased again in 2005. As was the case in 2004, most of the products based on flutriafol were sold for use against Asian soybean rust in Brazil despite a general fall in sales of fungicides in that country. A contributing factor was the introduction
31 March 2006 © Market Scope Europe Ltd www.crop-protection-monthly.co.uk